Pay rises cost NHS £1.5bn

More than a third of the additional £4.5bn being invested in the NHS will fund pay rises.

Health think-tank the King’s Fund analysed where the additional money earmarked for 2006/7 will be spent and estimates only around £1.25bn – 28% – will go on improving care and cutting waiting times.

Their report, Where’s the money going? also predicted a further third
will fund higher drug costs and servicing clinical negligence claims.

The prediction reflects figures from 2005/6 when half of the £3.6bn increase was spent on pay rises, and more than a third on keeping up with rising prices. Less than £500m was left to spend on developing services and meeting targets.

The authors said consultant and nurse pay rates were already near the top of the international league table.

The report looked at the £54.3bn estimated budget for 2006/7 which included hospital and community health services in England, but excluded general practice, dentists and prescriptions drugs.

It also predicted the NHS deficit for 2006/7 would be the largest for a decade, exceeding the £500m overspend in 2005/6, but conceded it may reduce by the end of the financial year.

The government said the analysis had ignored efficiency savings which are reinvested into service development. Currently ‘turnaround teams’ have been sent in to trusts with persistent financial difficulties.